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Bitcoin Power Businesses The Almighty Buck

New York Power Companies Can Now Charge Bitcoin Miners More (arstechnica.com) 128

Last Wednesday, the New York State Public Service Commission (PSC) ruled that municipal power companies could charge higher electricity rates to cryptocurrency miners who try to benefit from the state's abundance of cheap hydroelectric power. Ars Technica reports: Over the years, Bitcoin's soaring price has drawn entrepreneurs to mining. Bitcoin mining enterprises have become massive endeavors, consuming megawatts of power on some grids. To minimize the cost of that considerable power draw, mining companies have tried to site their operations in towns with cheap electricity, both in the U.S. and around the world. In the U.S., regions with the cheapest energy tend to be small towns with hydroelectric power. But mining booms in small U.S. towns are not always met with approval. A group of 36 municipal power authorities in northern and western New York petitioned the PSC for permission to raise electricity rates for cryptocurrency miners because their excessive power use has been taxing very small local grids and causing rates to rise for other customers. The PSC responded on Wednesday that it would allow those local power companies to raise rates for cryptocurrency miners. The response noted that New York's local power companies, which are customer-owned and range in size from 1.5 MW to 122 MW, "acquire low-cost power, typically hydro, and distribute the power to customers at no profit." If a community consumes more than what has been acquired, cost increases are passed on to all customers. "In Plattsburgh, for example, monthly bills for average residential customers increased nearly $10 in January because of the two cryptocurrency companies operating there," the PSC document says. The city of Plattsburgh, New York has since imposed an 18-month moratorium on commercial cryptocurrency mining to "protect and enhance the city's natural, historic, cultural and electrical resources."
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New York Power Companies Can Now Charge Bitcoin Miners More

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  • by locater16 ( 2326718 ) on Tuesday March 20, 2018 @04:26AM (#56289497)
    Current cryptocurrency is uselss. Unbound computer work for reward is a fundamentally flawed concept. Cryptographic blockchains should be run for maximum possible efficiency, the distributed proof of transfer suffers nothing from being efficient. In fact it gains from it, making cryptocurrencies easier and faster to run. But they aren't designed that way, they're all designed for an gigantically unnecessary amount of compute power to be thrown at them until such time as the amount of electricity and hardware they use is equal to the reward they put out, despite the low, slow amount of transfers they manage.

    Cryptocurrencies need to become actual currency, not artificial investment tools that produce nothing of significant value while wasting valuable power and hardware.
    • Re: (Score:2, Insightful)

      For a while, I tried to ignore people (on a tech site) expressing how ignorant they are about cryptocurrencies. Ain't got no time for long for long rant, "Unbound computer work for reward" is a side-effect of securing system against bad actors, have hopes of lightening network solving parts of this. Also Proof of Work is not the only way to go, Proof of Stake, Delegated Proof of Stake, Byzantine Fault Tolerance and Directed Acyclic Graph, etc are also out there. So you could try reading up a bit before shoo
      • Yes, GP is an ignorant fool. Slash moderation has ultimately served to reward posters who speak confidently about anything regardless of their knowledge. With such a diverse range of topics, the odds of getting a knowledgeable moderator on any given topic are very slim. The /. model works for general knowledge posts and random crapposts, but not for anything deep and/or technical.

        • Yes, GP is an ignorant fool. Slash moderation has ultimately served to reward posters who speak confidently about anything regardless of their knowledge.

          Imagine the irony if your post were to get modded up.

          • Yes, GP is an ignorant fool. Slash moderation has ultimately served to reward posters who speak confidently about anything regardless of their knowledge.

            Imagine the irony if your post were to get modded up.

            Is it just me or have people forgotten the meaning of irony?

    • > Cryptographic blockchains should be run for maximum possible efficiency, the distributed proof of transfer suffers nothing from being efficient

      There are plenty of other uses of blockchain technology, including currencies that do not require that much of a verification.

      Second blockchain platform is Ethereum which is used also for distributed computing.

    • What would be ideal would be more cryptocurrencies that use proof of storage, not proof of work. This would provide two benefits. It would first lower the amount of power wasted to twiddle numbers. Second, it would urge storage makers to increase storage density and make higher capacity drives for less cash, benefiting everyone.

  • by nateman1352 ( 971364 ) on Tuesday March 20, 2018 @04:49AM (#56289547)

    Keep in mind that the only thing that is really happening here is that only a fixed amount of electricity is available each month at subsidized pricing rates. The only change here is that crypto miners get lowest priority of subsidized power. For example, lets say that every month the city gets 40 gWh of subsidized electricity from their contract with the power company that permitted the construction of a hydro dam within city limits. On a given month, lets say the residential and non-crypto mining industrial buildings in the city use 35 gWh of power, and the miners use 15 gWh. In this scenario, the miners will get 5 gWh at the subsidized rates, but will have to pay regular price on the remaining 10 gWh past the city's quota of subsidized power.

    Seems pretty reasonable to me... the miners still get access to some cheap power, so its better than what they would get elsewhere, but at the same time the consequences of their excessive power consumption doesn't end up forcing the residential customers of the city to buy a percentage of their power at full price, which was what happened previously.

    • by Solandri ( 704621 ) on Tuesday March 20, 2018 @05:33AM (#56289617)
      The bigger problem is that electricity pricing is done locally, while production is done nationally (or even internationally in the case of the U.S. and Canada). That is, your electricity rates depend on the cost of the plants which are nearby you. But the power grid is national. Shortages in one locale are made up by diverting power from a different location. The net result is that if there's a marginal increase in the consumption of electricity, the price the country pays for it is the marginal price for whatever power plant ends up generating that extra electricity. Hydro (and solar and wind) are supply-limited, so can never provide this marginal increase in electricity production. Nuclear plants are slow to ramp up or down, so are usually run at full capacity 24/7.

      So the extra electricity used by crytocurrency mining comes entirely from fossil fuel plants. Even if they're located in an area which gets its electricity from hydro, their extra power consumption means there's less hydro power available to send to neighboring locales. That neighboring locale has to make up that electricity shortfall somehow, so a coal or gas plant near them ends up burning more fuel to generate it.

      This is why it's pointless building your company next to a renewable power source just so you can advertise that your company is being green. Unless that renewable plant was built specifically to generate power for you (i.e. it wouldn't have been built otherwise), all you're doing is depriving someone else of renewable energy that they would've gotten if you hadn't built your company there. You haven't reduced the country's fossil fuel consumption, you've just pushed your fossil fuel consumption onto someone else just so you can claim the bragging rights of being green when in fact you're having zero net effect on the nation's pollution generation.

      It's also why you should try to conserve electricity even if you live in an area with cheap electricity rates (e.g. Pacific Northwest, home of U.S. hydro power). Every kWh of hydro power you don't use is a kWh which gets transmitted to another part of the country, meaning some coal or gas plant somewhere has to generate a kWh less energy, and the air is that much cleaner for it.

      Real reduction in fossil fuel emissions comes only two ways - reducing the country's overall power consumption, and increasing the percentage of power generated by nuclear and renewables. Cryptocurrency mining violates the first, so is just bad for the country regardless of where you do it. (Though there is an exception if you can do it during winter in an area which would've used electricity for heating anyway. It doesn't matter if the heat comes from an electric radiator or from a massive bank of GPUs. Both are electricity-in, heat-out at 100% conversion efficiency.)
      • by JBMcB ( 73720 )

        This is why it's pointless building your company next to a renewable power source just so you can advertise that your company is being green. Unless that renewable plant was built specifically to generate power for you (i.e. it wouldn't have been built otherwise), all you're doing is depriving someone else of renewable energy that they would've gotten if you hadn't built your company there. You haven't reduced the country's fossil fuel consumption, you've just pushed your fossil fuel consumption onto someone else just so you can claim the bragging rights of being green when in fact you're having zero net effect on the nation's pollution generation.

        Doesn't that contradict your statement about power generation being national? If the effects of increased power consumption are globalized, then it wouldn't matter where you put your factory/business/house/whatever, right?

      • by Anonymous Coward

        The US grid is not national. It's broken up into 9 regions, with only minor transmitting between them. And most power is used quite close to the generation site.

      • by Anonymous Coward

        I agree until last few sentences:

        (Though there is an exception if you can do it during winter in an area which would've used electricity for heating anyway. It doesn't matter if the heat comes from an electric radiator or from a massive bank of GPUs. Both are electricity-in, heat-out at 100% conversion efficiency.)

        Very few people use electric resistance heaters on a large scale. Typically heat pumps are used, with efficiencies far greater than 100%. (E.g., 3x to 4x more efficient according to https://en.wikipedia.org/wiki/Heat_pump ).

        Additionally, we are typically talking about mining on a scale far larger than one would need to heat a house.

        Third, going along with your point about additional power usage coming from fossil fuels. Conversion efficiencies for fossil fuel power plants in

        • Typically heat pumps are used, with efficiencies far greater than 100%.

          Umm, I think one of the LAWS of thermodynamics would like to talk to you.

          • Umm, I think one of the LAWS of thermodynamics would like to talk to you.

            They're not so much laws as...guidelines.

            That's the great thing about heat pumps. A Joule of energy moves more than a Joule of heat around. For example, you use 100 Joules of electricity to move 200 Joules of heat from the ground to your house. Effectively, that's like having a 200% efficient electric heater. (Of course, I'm making up those numbers. The actual numbers will be way different.)

            Technically, your air conditioner is a heat pump too. It uses a Joule to move more than a Joule of heat out of your ho

            • I understand heat pumps. I understand geothermal. I also understand perpetual motion machines. If you move 200J using 100J of energy, then you can use any power generating system that is more than 50% efficient to create the 100J, and then move more heat, and then create more energy -- perpetual motion.
              • I understand heat pumps.

                I humbly suggest you don't completely understand heat pumps. They heat up your house while cooling down down the earth. Similarly, an AC cools down your house while heating up the outside up the air. It's just moving energy around, not creating any. This is, by the way, why opening your refrigerator door won't cool your house down.

                • I humbly suggest you don't completely understand heat pumps.

                  I humbly suggest that I understand them better than you do.

                  It's just moving energy around, not creating any.

                  You truly do not understand the laws of thermodynamics, do you? Nobody is suggesting that energy is created. But, if you "move around" 200J of heat using 100J of energy, then have an engine that produces just 101J from letting that 200J go back, then you've gained 1J in the process.

                  That's called a perpetual motion machine -- you get more out of the system than you put in.

                  Now, either you were spouting nonsense when you claimed that your heat pump

                  • I humbly suggest you don't completely understand heat pumps.

                    I humbly suggest that I understand them better than you do.

                    You clearly do not. The first AC you replied to gave you a good starting point to educate yourself.

                    A heat pump [wikipedia.org] really does produce 3W of heat per 1W of electricity consumed. It's not magic, it's not perpetual motion, and it does not violate thermodynamics. Follow the link and learn.

      • by PPH ( 736903 )

        So the extra electricity used by crytocurrency mining comes entirely from fossil fuel plants. Even if they're located in an area which gets its electricity from hydro, their extra power consumption means there's less hydro power available to send to neighboring locales. That neighboring locale has to make up that electricity shortfall somehow, so a coal or gas plant near them ends up burning more fuel to generate it.

        You are assigning some sort of rank to electricity usage that doesn't exist. Why can't I say that my Bitcoin mining operation is using the hydropower and the old couple down the street trying to stay warm are causing the demand for fossil fuel generation. Or the rich guy recharging his Tesla?

        It's more accurate to assume that everyone's demand or energy savings comes out of the same mix of generation. And a kWh saved either in insulating one's house or switching to efficient lighting is the same as one save

        • It's more accurate to assume that everyone's demand or energy savings comes out of the same mix of generation.

          Pacific Power calling. We'll happily sell you green power (power from renewable sources like wind) at a higher rate than standard old power from whatever source we're using today. We don't paint the electrons green or use a different wire to send them to you so you can't tell them apart, but we'll charge you for it anyway.

      • Unless that renewable plant was built specifically to generate power for you (i.e. it wouldn't have been built otherwise), all you're doing is depriving someone else of renewable energy that they would've gotten if you hadn't built your company there.

        Interesting example of this. The Safe Harbor Dam in PA was built with several turbines dedicated to powering the Pennsylvania Railroad (now Amtrak)'s 25 Hz overhead lines. Without the railroad as a customer there would have been less turbines installed in the initial construction, so the PRR was partially a "green" company in that sense.

        Over the years many more turbines were added (all 60 Hz), so it stands to reason that there would be the same number today regardless of the original customers. So at wha

    • by Anonymous Coward

      Gigawatt hour has a capital G, by the way.

      milli and kilo would have lowercase prefix.

      mWh milliwatt hour
      kWh kilowatt hour
      MWh megawatt hour
      GWh gigawatt hour
      TWh terawatt hour

      (Ideally the h for hour would be separated from GW, but that’s a separate issue, and only done in proper typesetting.)

    • Keep in mind that the only thing that is really happening here is that only a fixed amount of electricity is available each month at subsidized pricing rates.

      It's not a subsidized rate. It's the rate the city is being charged. The city has failed by refusing to buy enough power, a scarcity that is created by city managers not physical limits.

      The only change here is that crypto miners get lowest priority of subsidized power.

      Did you read the same summary I did? The change is that the cities are being allowed to charge more for certain uses of power. That's not getting "lowest priority", that's getting the same priority but paying more.

      Why not just implement tiered pricing like every other electric company I've ever dealt with has? That way EVE

  • I did not know how far this would go.

  • I'm right there with them and feel those communities' pains. I hope th...

    New York has since imposed an 18-month moratorium...to "protect and enhance the city's natural, historic, cultural and electrical resources.

    Wtf, politicians! Now I want the miners to win >:-(

  • I don't know if crypto currencies have value. I know generating your own power does have value. Go for it.

  • I would classify this as spatial arbitrage [wikipedia.org], or perhaps regulatory arbitrage if they were taking advantage of the way power was supplied to large consumers during certain times.

  • Huge server farms of automated trading, suck up tons of power ... will these rising rates apply to them, too ?

  • If you just charge them more for the electricity than they can make mining cryptocurrency with the electricity, then they'll go away -- problem solved! I still curious why the bitcoin miners don't locate where the electricity is the absolute cheapest.
  • Now they're charging my hydroponic grow operation a lot more! (And mining is probably generating a lot of false positive for the investigators looking for grow operations.)
  • So.... People using the power they are paying for pay extra because they are using the power they are paying for? They like going to the supermarket for apples. They are $1 each. But you want 1,000 apples. Bulk discount, right? Appareny not. They charge you *more* for each apple, using this logic.

How many NASA managers does it take to screw in a lightbulb? "That's a known problem... don't worry about it."

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